JBones

I agree that for calculation of the Normal Accrual Rates, the hypothetical account balance would be projected and converted using the plan's rates, but for the calculation of Most Valuable Accrual Rates, if you are defining the most valuable benefit as lump sum, then you would use 8.50% to project and an allowable table other than the plan's AE to convert to an annuity at testing age. I have had some IRS reviewers insist that the MVAR is based on lump-sum and others insist that is is based on J&S.

I have been lucky enough to not have to prepare any RMD calculations under the final 401(a)(9) regulations up to now, so forgive me if the answer is obvious. My client has a frozen defined benefit plan with a rollover account. He turns 70.5 in 2008 and is required to begin distributions by 4/1/09. His accrued benefit (sla) is $3,125 as of 12/31/2007. He just sold his practice, but maintains the corporation that sponsors the plan and will be receiving accounts payable throughout 2008. Because of this, he is looking for a deduction for 2008 and will likely amend the plan's benefit formula effective 1/1/08 by 3/15/09 in order to acheive a deduction. After this, he will be closing the corporation and terminating the plan during 2009. He is interested in knowing what his RMD's will look like with respect to the defined benefit plan until the termination occurs. My understanding is that he will begin to take a monthly distribution of $3,125 per month by April 1, 2009 through December 31, 2009 (this is his RMD for the 2008 calendar year?). When the rollover occurs, an amount equal to any remaining payments of $3,125 through the end of year that weren't made because the plan terminated prior to their date of payment plus either 12x the new monthly benefit as of 12/31/2008, or an amount equal to his lump sum divided by the applicable factor will not be eligible for rollover and will be taxable to him. In effect, he is taxed for 2 RMD's during 2009. Is this correct? I am assuming that the rollover account within the DB account is being handled correctly.